John Hancock Funds
John Hancock
Global Resources
Fund
FINAL REPORT
September 6, 1996
<PAGE>
John Hancock Funds - Global Resources Fund
Trustees
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham *
Charles F. Fretz *
Harold R. Hiser, Jr. *
Anne C. Hodsdon
Charles L. Ladner*
Leo E. Linbeck, Jr.*
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman H. Smith, USMC (Ret.)*
John P. Toolan *
* Members of the Audit Committee
Officers
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
Custodian
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Transfer Agent
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
Investment Adviser
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Principal Distributor
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
Legal Counsel
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
<PAGE>
John Hancock Global Resources Fund
Statement of Assets and Liabilities
Final Report September 6, 1996* (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $23,386,874) $ 32,945,261
Joint repurchase agreement ($6,445,000) 6,445,000
Corporate savings account 179
--------------------
39,390,440
Foreign currency, at value (cost - $24,650) 24,675
Dividend and interest receivable 931
Foreign tax receivable 2,698
Miscellaneous receivable 8,759
Other assets 5,215
--------------------
Total Assets 39,432,718
-----------------------------------------------------
Liabilities:
Payable for shares repurchased 720
Payable to John Hancock Advisers, Inc. and affiliates - Note B 38,378
Accounts payable and accrued expenses 62,891
--------------------
Total Liabilities 101,989
-----------------------------------------------------
Net Assets:
Capital paid-in 29,874,900
Distributions in excess of net realized gain on investments and
foreign currency transactions (102,689)
Net unrealized appreciation of investments and
foreign currency transactions 9,558,518
--------------------
Net Assets $ 39,330,729
====================================================
Net Asset Value Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - 75,000,000
shares authorized with $0.01 per share par
value, respectively)
Class A - $5,103,607 / 274,943 $ 18.56
===============================================================================
Class B - $34,227,122 / 1,876,138 $ 18.24
===============================================================================
Maximum Offering Price Per Share**
Class A - ($18.56 x 105.26%) $ 19.54
===============================================================================
* The net assets of the John Hancock Global Resources Fund ("the Fund") were
merged into the John Hancock Special Opportunities Fund as of the close of
business on September 6, 1996 and the Fund was subsequently terminated. The
Statement of Assets and Liabilities reflects the Fund's position prior to
the transfer of net assets and the termination of the Fund. (See Note A to
the Notes to Financial Statements).
** On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
See notes to financial statements.
<PAGE>
John Hancock Global Resources Fund
Statement of Operations
For the period November 1, 1995 to
September 6, 1996* (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest $ 101,245
Dividends (net of foreign withholding taxes of $3,551) 88,529
--------------------------
189,774
--------------------------
Expenses:
Investment management fee - Note B 231,916
Distribution/service fee - Note B
Class A 9,077
Class B 268,260
Transfer agent fee - Note B 108,794
Custodian fee 49,357
Registration and filing fees 30,344
Printing 27,361
Auditing fee 12,994
Miscellaneous 5,274
Financial services fee - Note B 4,914
Legal fees 3,480
Trustees' fees 2,340
Advisory board 2,245
--------------------------
Total Expenses 756,356
--------------------------
Net Investment Loss (566,582)
--------------------------
Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions
Net realized gain on investments sold 2,296,334
Net realized loss on foreign currency transactions (8,779)
Change in net unrealized appreciation/depreciation
of investments 9,014,806
Change in net unrealized appreciation/depreciation
of foreign currency transactions (107)
--------------------------
Net Realized and Unrealized Gain on
Investments and Foreign Currency
Transactions 11,302,254
-----------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $ 10,735,672
====================================================
* The net assets of the John Hancock Global Resources Fund ("the Fund") were
merged into the John Hancock Special Opportunities Fund as of the close of
business on September 6, 1996 and the Fund was subsequently terminated. The
Statement of Operations reflects the Fund's position prior to the transfer
of net assets and the termination of the Fund. (See Note A to the Notes to
Financial Statements).
See notes to financial statements.
<PAGE>
John Hancock Global Resources Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FOR THE PERIOD
YEAR ENDED NOVEMBER 1, 1995 TO
OCTOBER 31, SEPTEMBER 6, 1996
Increase (Decrease) in Net Assets: 1995 (UNAUDITED)**
---------------------------------------------
<S> <C> <C>
From Operations:
Net investment loss ($ 472,186) ($ 566,582)
Net realized gain (loss) on investments
sold and foreign currency transactions (312,178) 2,287,555
Change in net unrealized appreciation/depreciation
of investments and foreign currency transactions (3,606,873) 9,014,699
-------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (4,391,237) 10,735,672
-------------------------------------------
Distributions to Shareholders:
Distributions from net realized gain on investments
sold and financial futures contracts
Class A - (none and $0.6246 per share, respectively) -- (166,315)
Class B - (none and $0.6246 per share, respectively) -- (1,132,907)
Distributions in excess of net realized gain on investments
Class A - (none and $0.0493 per share, respectively) -- (13,145)
Class B - (none and $0.0493 per share, respectively) -- (89,544)
-------------------------------------------
Total Distributions to Shareholders -- (1,401,911)
-------------------------------------------
From Fund Share Transactions - Net* (9,191,467) 1,270,798
-------------------------------------------
Net Assets:
Beginning of period 42,308,874 28,726,170
===========================================
End of period $ 28,726,170 $ 39,330,729
===========================================
* Analysis of Fund Share Transactions:
<CAPTION>
FOR THE PERIOD
YEAR ENDED NOVEMBER 1, 1995 TO
OCTOBER 31, SEPTEMBER 6, 1996
1995 (UNAUDITED)**
-------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 106,612 $ 1,595,642 2,095,271 $ 37,014,641
Shares issued to shareholders in
reinvestment of distributions -- -- 9,335 171,574
-------------------------------------------------------------
106,612 1,595,642 2,104,606 37,186,215
Less shares repurchased (284,537) (4,070,740) (1,995,615) (35,437,828)
-------------------------------------------------------------
Net increase (decrease) (177,925) ($ 2,475,098) 108,991 $ 1,748,387
=============================================================
CLASS B
Shares sold 497,933 $ 7,105,217 1,043,302 $ 17,563,686
Shares issued to shareholders in
reinvestment of distributions -- -- 59,479 1,074,197
-------------------------------------------------------------
497,933 7,105,217 1,102,781 18,637,883
Less shares repurchased (964,221) (13,821,586) (1,131,821) (19,115,472)
-------------------------------------------------------------
Net decrease (466,288) ($ 6,716,369) (29,040) ($ 477,589)
=============================================================
</TABLE>
** The net assets of the John Hancock Global Resources Fund ("the Fund") were
merged into the John Hancock Special Opportunities Fund as of the close of
business on September 6, 1996 and the Fund was subsequently terminated. The
Statement of Changes in Net Assets reflects the Fund's position prior to
the transfer of net assets and the termination of the Fund. (See Note A to
the Notes to Financial Statements).
See notes to financial statements.
<PAGE>
John Hancock Funds - Global Resources Fund
Financial Highlights
Selected data for each share of beneficial interest outstanding throughout the
periods indicated, investment returns, key ratios and supplemental data are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
FOR THE PERIOD JUNE 15, 1994
NOVEMBER 1, 1995 TO (COMMENCEMENT
SEPTEMBER 6, 1996 YEAR ENDED OF OPERATIONS)
(UNAUDITED) OCTOBER 31, 1995(a) TO OCTOBER 31, 1994
------------------- ------------------- -------------------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 14.00 $ 15.62 $ 14.89
------------ ------------- ------------
Net Investment Loss (b) (0.17) (0.08) (0.08)
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions 5.40 (1.54) 0.81
------------ ------------- ------------
Total from Investment Operations 5.23 (1.62) 0.73
------------ ------------- ------------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold (0.62) -- --
Distributions in Excess of Net Realized Gain (0.05) -- --
------------ ------------- ------------
Total Distributions (0.67) -- --
------------ ------------- ------------
Net Asset Value, End of Period $ 18.56(f) $ 14.00 $ 15.62
============ ============= ============
Total Investment Return at Net Asset Value (c) 37.43(d) (10.37%) 4.90%(d)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $ 5,104 $ 2,324 $ 5,372
Ratio of Expenses to Average Net Assets 1.77% 1.93% 0.73%
Ratio of Net Investment Income to Average Net Assets (1.14%) (0.53%) (0.42%)
Portfolio Turnover Rate 169% 101% 96%
Average Broker Commission Rate (per share of security) (e) $ 0.0459 N/A N/A
<CAPTION>
FOR THE PERIOD
NOVEMBER 1, 1995 TO YEAR ENDED OCTOBER 31,
SEPTEMBER 6, 1996 ---------------------------------------------------------
(UNAUDITED) 1995(a) 1994 1993 1992 1991
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 13.86 $ 15.58 $ 15.69 $ 12.41 $ 12.20 $ 11.57
------- ------- ------- ------- ------- -------
Net Investment Loss (b) (0.28) (0.21) (0.23) (0.24) (0.24) (0.17)
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency Transactions 5.33 (1.51) 0.12 3.52 0.58 1.24
------- ------- ------- ------- ------- -------
Total from Investment Operations 5.05 (1.72) (0.11) 3.28 0.34 1.07
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income -- -- -- -- -- --
Distributions from Net Realized Gain on
Investments Sold (0.62) -- -- -- (0.13) (0.44)
Distributions in Excess of Net Realized Gain (0.05) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions (0.67) -- -- -- (0.13) (0.44)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 18.24(f) $ 13.86 $ 15.58 $ 15.69 $ 12.41 $ 12.20
======= ======= ======= ======= ======= =======
Total Investment Return at Net Asset Value (c) 31.60%(d) (11.04%) (0.70%) 26.43% 2.93% 9.81%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $34,227 $26,402 $36,937 $19,498 $ 7,428 $10,766
Ratio of Expenses to Average Net Assets 2.54% 2.68% 2.54% 2.92% 3.75% 3.64%
Ratio of Net Investment Loss to Average Net Assets (1.93%) (1.43%) (1.52%) (1.65%) (2.01%) (1.47%)
Portfolio Turnover Rate 169% 101% 96% 83% 59% 93%
Average Broker Commission Rate (per share of
security) (e) $0.0459 N/A N/A N/A N/A N/A
</TABLE>
* On an annualized basis.
(a) On December 22, 1994, John Hancock Advisers, Inc. became the investment
adviser of the Fund.
(b) Per share information has been calculated using the average number of
shares outstanding.
(c) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(d) Not annualized.
(e) Average broker commission rate (per share of security) as required by
amended disclosure requirements effective September 1, 1995.
(f) Net asset value per share, before the merger of assets to the John Hancock
Special Opportunities Fund, and the termination of the Fund (See Note A to
the Notes to Financial Statements).
See notes to financial statements.
<PAGE>
John Hancock Funds - Global Resources Fund
Schedule of Investments
September 6, 1996
(Unaudited)
The Schedule of Investments is a complete list of all securities owned by Global
Resources Fund on September 6, 1996.
It's divided into two main categories: common stocks and short-term investments.
The common stocks are further broken down by industry groups. Short-term
investments, which represent the Fund's "cash" position, are listed last.
- --------------------------------------------------------------------------------
MARKET
ISSUER,DESCRIPTION NUMBER OF SHARES VALUE
- ------------------ ---------------- ------------
COMMON STOCKS
Agricultural (6.52%)
Dekalb Genetics Corp. - Class B 33,500 $1,306,500
Northland Cranberries, Inc. 68,000 1,258,000
------------
2,564,500
------------
Chemicals (1.20%)
Monsanto Co. 15,000 472,500
------------
Energy - Equipment (10.54%)
Global Marine, Inc.* 91,000 1,353,625
Nabors Industries, Inc.* 25,000 368,750
Pride Petroleum Services, Inc.* 28,500 409,688
Smith International, Inc.* 33,000 1,122,000
Varco International, Inc.* 54,500 892,438
------------
4,146,501
------------
Energy - Exploration and Production (19.84%)
Baker Hughes, Inc. 29,000 877,250
Benton Oil & Gas Co. * 43,000 838,500
Chesapeake Energy Corp.* 16,000 924,000
Flores & Rucks, Inc.* 26,500 901,000
Helmerich & Payne, Inc. 7,000 282,625
Nuevo Energy Co. * 34,500 1,423,125
Newfield Exploration Co.* 7,000 311,500
Stone Energy Corp.* 21,000 404,250
Swift Energy Co.* 64,000 1,456,000
Vintage Petroleum, Inc. 15,000 384,375
------------
7,802,625
------------
Energy - Services (21.81%)
Diamond Offshore Drilling, Inc.* 25,000 1,278,125
Energy Ventures Inc. * 33,500 1,226,938
ENSCO International, Inc.* 28,500 840,750
Falcon Drilling Company, Inc.* 37,000 818,625
Pool Energy Services Co.* 20,000 233,750
Precision Drilling Corp.(Canada)* 31,000 756,552
Reading and Bates Corp. * 41,000 1,019,875
Tesco Corp.(Canada)* 123,000 1,335,128
Tosco Corp. 11,000 537,625
UTI Energy Corp.* 35,000 529,375
------------
8,576,743
------------
Industrial - Intermediate Materials (7.13%)
Oregon Metallurgical Corp.* 15,000 459,375
RMI Titanium Co.* 50,000 1,043,750
Sinter Metals. Inc.* 35,000 770,000
Titanium Metals Corp.* 19,000 532,000
------------
2,805,125
------------
Mining (14.71%)
Aurora Gold Ltd.(Australia)* 120,000 215,303
Bema Gold Corp.* 166,000 1,245,000
Compania de Minas Buenaventura S.A. ADR (Peru) 35,000 660,625
Euro-Nevada Mining Corp.(Canada) 56,000 1,391,151
Greenstone Resources Ltd.(Canada)* 100,000 1,500,000
Newmont Gold Co. 4,000 217,000
Stillwater Mining Co.* 24,000 558,000
------------
5,787,079
------------
Tobacco (2.01%)
Consolidated Cigar Holdings Inc.* 10,000 302,500
Culbro Corp.* 8,500 487,688
------------
790,188
------------
TOTAL COMMON STOCKS
(Cost $23,386,874) ( 83.76%) 32,945,261
--------- ------------
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INTEREST PAR VALUE MARKET
ISSUER DESCRIPTION RATE (000'S OMITTED) VALUE
- ------------------ -------- ------------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (16.39)
Investment in a joint repurchase
agreement transaction with
Swiss Bank, Inc. - Dated 09-06-96,
due 09-09-96 (secured by U.S. Treasury
Notes, 6.25% - 7.125% due 8-31-00 thru
9-30-99, and U.S. Treasury Bonds, 7.25%
Due 5-15-16 thru 8-15-22) Note A 5.14% $6,445 $ 6,445,000
-----------
Corporate Savings Account (0.00%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 4.75% 179
===========
TOTAL SHORT-TERM INVESTMENTS (16.39%) 6,445,179
--------- -----------
TOTAL INVESTMENTS (100.15%) $39,390,440
================== ===========
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
John Hancock Funds - Global Resources Fund
Portfolio Concentration (Unaudited)
- -----------------------------------
The Global Resources Fund invests primarily in equity securities of issuers in
the natural resource industry in the United States and abroad. The concentration
of investments by industry category for individual securities held by the Fund
is shown in the schedule of investments. In addition, concentration of
investments can be aggregated by various countries. The table below shows the
percentage of the Fund's investments at September 6, 1996 assigned to the
various country categories.
MARKET VALUE AS A
COUNTRY DIVERSIFICATION % OF NET ASSETS
- -------------------------------------------- ------------------
Australia................................... 0.55
Canada...................................... 12.67
Peru........................................ 1.68
United States............................... 85.25
------------------
TOTAL INVESTMENTS 100.15%
==================
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
Notes to Financial Statements
John Hancock Funds - John Hancock Global Resources Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Series, Inc. (the "Corporation") is a diversified, open-end
management investment company, registered under the Investment Company Act of
1940. The Corporation consists of three series: John Hancock Global Resources
Fund (the "Fund"), John Hancock Emerging Growth Fund and John Hancock Money
Market Fund (collectively, the "Funds"). The investment objectives of the Fund
are to protect the purchasing power of shareholders' capital and to achieve
growth of capital.
The Board of Directors authorized the issuance of multiple classes of
shares of the Fund, designated as Class A and Class B shares. The shares of each
class represented an interest in the same portfolio of investments of the Fund
and had equal rights to voting, redemptions, dividends, and liquidation, except
that certain expenses subject to the approval of the Board of Directors, may
have been applied differently to each class of shares in accordance with
regulations of the Securities and Exchange Commission. Shareholders of a class
which bore distribution and service expenses under terms of a distribution plan,
have exclusive voting rights regarding that distribution plan.
On August 14, 1996, shareholders of the Fund approved a plan of
reorganization between the Fund and John Hancock Special Opportunities Fund
("Special Opportunities Fund") providing for the transfer of substantially all
of the assets and liabilities of the Fund to Special Opportunities Fund in
exchange solely for shares of beneficial interest of Special Opportunities Fund.
After this transaction and as of the close of business on September 6, 1996, the
Fund was terminated. The financial statements presented herein reflect the
position of the Fund prior to the exchange of net assets and termination of the
Fund. Significant accounting policies of the Fund were as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio were valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Board of Directors. Short-term debt investments maturing within
60 days were valued at amortized cost which approximates market value. All
portfolio transactions initially expressed in terms of foreign currencies had
been translated into U.S. dollars as described in "Foreign Currency Translation"
below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement. Aggregate cash balances were
invested in one or more repurchase agreements, whose underlying securities were
obligations of the U.S. government and/or its agencies. The Fund's custodian
bank received delivery of the underlying securities for the joint account on the
Fund's behalf. The Adviser was responsible for ensuring that the agreement is
fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions were recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments were determined on the identified cost basis. Capital gains realized
on some foreign securities were subject to foreign taxes and are accrued, as
applicable.
<PAGE>
Notes to Financial Statements
John Hancock Funds - John Hancock Global Resources Fund
FEDERAL INCOME TAXES The Fund's policy was to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required as of September 6, 1996, the Fund's final tax year end. DIVIDENDS,
DISTRIBUTIONS AND INTEREST Dividend income on investment securities was recorded
on the ex-dividend date or, in the case of some foreign securities, on the date
thereafter when the Fund was made aware of the dividend. Interest income on
investment securities was recorded on the accrual basis. Foreign income may be
subject to foreign withholding taxes which were accrued as applicable.
The Fund recorded all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions were
determined in conformity with income tax regulations, which may differ from
generally accepted accounting principals. Dividends paid by the Fund with
respect to each class of shares were calculated in the same manner, at the same
time and were in the same amount, except for the effect of expenses that may
have been applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust were directly identifiable to
an individual Fund. Expenses which were not readily identifiable to a specific
Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) were calculated at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, were calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
DISCOUNT ON SECURITIES The Fund accreted discount from par value on securities
from either the date of issue or date of purchase over the life of the security,
as required by the Internal Revenue Code.
USE OF ESTIMATES The preparation of these financial statements in accordance
with generally accepted accounting principles incorporated estimates made by
management in determining the reported amounts of assets, liabilities, revenues,
and expenses of the Fund. Actual results could differ from these estimates.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in
terms of foreign currencies were translated into U.S. dollars based on London
currency exchange quotations as of 5:00 p.m., London time, on the date of any
determination of the net asset value of the Fund. Transactions affecting
statement of operations accounts and net realized gain/(loss) on investments
were translated at the rates prevailing at the dates of the transactions.
The Fund did not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations were included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at fiscal
year end, resulting from changes in the exchange rate.
<PAGE>
Notes to Financial Statements
John Hancock Funds - John Hancock Global Resources Fund
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may have entered into
forward foreign currency exchange contracts as a hedge against the effect of
fluctuations in currency exchange rates. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date at a set price. The aggregate principal amounts of the contracts
were marked-to-market daily at the applicable foreign currency exchange rates.
Any resulting unrealized gains and losses were included in the determination of
the Fund's daily net assets. The Fund recorded realized gains and losses at the
time the forward foreign currency contract was closed out or offset by a
matching contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
These contracts involve market or credit risk in excess of the unrealized
gain or loss reflected in the Fund's Statement of Assets and Liabilities. The
Fund may have purchased and sold forward contracts to facilitate the settlement
of foreign currency denominated portfolio transactions, under which it intended
to take delivery of the foreign currency. Such contracts normally involve no
market risk other than that offset by the currency amount of the underlying
transaction.
At September 6, 1996, there were no open forward foreign currency exchange
contracts.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the investment management contract, the Fund paid a monthly management fee
to the Adviser for a continuous investment program equivalent, on an annual
basis, to the sum of 0.75% of Fund's average daily net asset value.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, were in excess of the most restrictive state
limit where the Fund was registered to sell shares, the fee payable to the
Adviser was reduced to the extent of such excess, and the Adviser made
additional arrangements necessary to eliminate any remaining excess expenses.
The limits were 2.5% of the first $30,000,000 of the Fund's average daily net
asset value, 2.0% of the next $70,000,000, and 1.5% of the remaining average
daily net asset value.
The Fund had a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the period ended
September 6, 1996, net sales charges received with regard to sales of Class A
shares amounted to $42,535. Out of this amount, $6,289 was retained and used for
printing prospectuses, advertising, sales literature and other purposes, $24,229
was paid as sales commissions to unrelated broker-dealers and $12,017 was paid
as sales commissions to sales personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation and
its subsidiaries, which include Tucker Anthony and Sutro.
<PAGE>
Notes to Financial Statements
John Hancock Funds - John Hancock Global Resources Fund
Class B shares which were redeemed within six years of purchase were
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC were paid to JH Funds and were used in whole or in part to defray
its expenses related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended September 6,
1996, contingent deferred sales charges paid to JH Funds amounted to $87,399.
In addition, to reimburse JH Funds for the services it provided as
distributor of shares of the Fund, the Fund adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund made payments to JH Funds, at an
annual rate not to exceed 0.25% of Class A average daily net assets and 1.00% of
Class B average daily net assets to reimburse JH Funds for its distribution and
service costs. Up to a maximum of 0.25% of such payments may have been service
fees as defined by the amended Rules of Fair Practice of the National
Association of Securities Dealers. Under the amended Rules of Fair Practice,
curtailment of a portion of the Fund's 12b-1 payments could occur under certain
circumstances.
The Fund had a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. The Fund paid Investor Services a fee based on the number of
shareholder accounts and certain out-of-pocket expenses.
On March 26, 1996, the Board of Directors approved retroactively to January
1, 1996, an agreement with the Adviser to perform necessary tax and financial
management services for the Funds. The compensation for 1996 is estimated to be
at an annual rate of 0.01875% of the average net assets of each Fund.
Mr. Edward J. Boudreau, Jr., Ms. Anne C. Hodsdon and Mr. Richard S.
Scipione are directors and/or officers of the Adviser and/or its affiliates, as
well as Directors of the Fund. The compensation of unaffiliated Directors was
borne by the Fund. Effective with the fees paid for 1995, the unaffiliated
Directors could elect to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund made investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the Fund's
deferred compensation liability were recorded on the Fund's books as an other
asset. The deferred compensation liability and the related other asset are
always equal and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses. At September
6, 1996, the Fund's deferred compensation had an unrealized appreciation of
$181.
The Fund had an independent advisory board composed of certain retired
Directors who provided advice to the current Board of Directors in order to
facilitate a smooth management transition. The Fund paid the advisory board and
its counsel a fee.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended September 6, 1996, aggregated $57,984,093 and $64,705,424, respectively.
There were no purchases or sales of obligations of the U.S. government and its
agencies during the period ended September 6, 1996.
The cost of investments owned at September 6, 1996 for federal income tax
purposes was $29,934,563. Gross unrealized appreciation and depreciation of
investments aggregated $9,597,414 and $141,716, respectively, resulting in net
unrealized appreciation of $9,455,698.
<PAGE>
Notes to Financial Statements
John Hancock Funds - John Hancock Global Resources Fund
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the period ended September 6, 1996, the Fund has reclassified amounts to
reflect a decrease in accumulated net investment loss of $566,582, a decrease in
accumulated net realized gain on investments of $566,612 and an increase in
capital paid-in of $30. This represents the amount necessary to report these
balances on a tax basis, excluding certain temporary differences, as of
September 6, 1996. Additional adjustments may be needed in subsequent reporting
periods. These reclassifications, which have no impact on the net asset value of
the Fund, are primarily attributable to certain differences in the computation
of distributable income and capital gains under federal tax rules versus
generally accepted accounting principles. The calculation of net investment
income per share excludes these adjustments.
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the distributions of the Fund during its fiscal period ended
September 6, 1996.
The Fund designated distributions to shareholders of $373,849 as a long
term capital gain dividend. Shareholders will receive a 1996 U.S. Treasury
Department Form 1099-DIV in January of 1997 representing their proportionate
share.
For the fiscal period ending September 6, 1996, none of the distributions
qualify for the dividends received deduction.
